Chapter 6 Corporate Strategy CHAPTER 6 CORPORATE STRATEGY

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Chapter 6: Corporate Strategy

Chapter 6: Corporate Strategy

CHAPTER 6 CORPORATE STRATEGY

CHAPTER 6 CORPORATE STRATEGY

MOVING ALONG THE VALUE CHAIN Vertical Horizontal • Backward Integration • Forward Integration •

MOVING ALONG THE VALUE CHAIN Vertical Horizontal • Backward Integration • Forward Integration • Diversification • Alliances

3 WAYS TO DIVERSIFY Greenfield Entry Merger or Acquisition Go it alone: Opening your

3 WAYS TO DIVERSIFY Greenfield Entry Merger or Acquisition Go it alone: Opening your own Buy your way in: Buying or getting operations bought out by another company

ADDING VALUE The Critical Question Why is this business more valuable because we own

ADDING VALUE The Critical Question Why is this business more valuable because we own it than if it operated alone? Deploying and Exploiting Current Resources

GE CORPORATE STRATEGY The company begins in 1878 selling light bulbs in New York

GE CORPORATE STRATEGY The company begins in 1878 selling light bulbs in New York City 1882 1895 1905 1917 Builds a power station Expands into locomotives & electrical transformers Introduces an electric X-Ray machine Begins the Electric Bond and Share Company Produces a superturbocharger for airplanes

GE CORPORATE STRATEGY 35% GE Segment Revenues, 2013 & 2016 30% % of Total

GE CORPORATE STRATEGY 35% GE Segment Revenues, 2013 & 2016 30% % of Total Revenue 25% 22% 21% 20% 17% 15% 11% 10% 12% 10% 8% 7% 5% 5% 0% 15% 0% Power & Water Renewable Energy 4% 0% Oil & Gas Energy Management 4% 6% 0% Aviation 2013 2016 Healthcare Transportation Appliances/ Lighting 0% Energy Connections/ Lighting GE Capital

THE 8 S’S: MECHANISMS TO CREATE VALUE 1. Slack Utilizing slack managerial capacity (diversify

THE 8 S’S: MECHANISMS TO CREATE VALUE 1. Slack Utilizing slack managerial capacity (diversify into related industries/markets) 2. Synergy Creating synergy between operating units 3. Shared Knowledge Exploiting or enhancing shared knowledge or core competences 4. Similar Business Models Employing similar business models

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